Ladies and Gentlemen, my friends:

I bear warm greetings from the government and the 85 million people from the Republic of the Philippines.

I know that you have had many host country presentations, and the question foremost in your mind is “why should I invest in your country?”

Indeed, “why should prospectors and developers invest in the Philippines?”

I crossed 11 times zones, was in the air or on the road for 24 hours to join you this afternoon, precisely to suggest why you should invest in the Philippines.

Allow me to break my presentation in three parts: First, we shall tee off with some trivia on our long and rich mining heritage; Second, and this should be the main part of the presentation, we shall what we have done, to create what we think of, a dramatically improved investment climate for mining; and Third, we shall briefly review the mineral reserves awaiting to be developed, together with some description of the major mining operations, currently going or in the pipelines.

First, a bit of history. The Philippines has historically been a major player in global mineral production.
In fact, the Philippines’ long history in mining predates the arrival of Ferdinand Magellan and the ships of Spain in the 16th century. Indeed, it can be speculated that the indigenous people’s display of gold trinkets and wares must have sealed their colonial fate. For the Spaniards wasted no time in annexing the islands and naming them after the Spanish crown prince, Felipe.

Despite its rich diversity in both metallic and non-metallic mineral resources, however, it was not until the 1930s that the Philippines had its first major mining boom when more than 50 vein-type and placer gold deposits began operations. By the mid-60s, the Philippines had risen to prominence as one of the world’s biggest producers of gold, copper, chromite and nickel.

Up to the mid-1980s, the mining industry played a key role in the economic development of the country, contributing as much as 30% of gross domestic product (GDP) and 50% of our exports. Toward the end of the 20th century, however, declining international metal prices and rising environmentalism, among other factors, pushed these figures down to less than two percent both of GDP and of export receipts. But the mining sector remained a formidable economic force, employing 104,000 workers and providing close to PhP5 billion in wages and benefits in 2003.

Now for the second question, what have we done to improve the climate for investing in the Philippines in terms of setting up the proper legal, policy and operational framework? With the estimated valuation of our country’s ore reserves at anywhere between US$800 billion to US$1 trillion, the Philippine government has set its sights on restoring the industry’s place as a major driver of economic growth.

This initiative to develop the mining industry has the full backing of the three branches of government. Specifically, our Congress passed the Philippine Mining Act in 1995. Our Supreme Court, in a historic decision, settled with finality the constitutionality of the Mining Act, more specifically its provisions on the Financial or Technical Assistance Agreement (FTAA). This means that even a wholly foreign-owned corporation can now enter into an FTAA with the Philippine Government for the large-scale exploration and development of its mineral resources. For her part, President Gloria Macapagal Arroyo has laid out a clear policy agenda to move the initiative forward.
For starters, mining has been singled out as a flagship industry that would be instrumental in meeting the targets of the Medium-Term Philippine Development Plan from 2004 to 2010. Since each direct job in the mining sector generates four to10 allied jobs, the industry clearly constitutes a major instrument for creating employment and reducing poverty.

The macro-economic plan stipulates the promotion of responsible mining that adheres to the principles of sustainable development, economic growth, environmental protection and social equity. It has been recognized that responsible mining benefits local and indigenous communities.

These principles underpinned the launch of a major program to revive the mining industry, signalled by the issuance of Executive Order No. 270 by President Gloria Macapagal Arroyo in January 2004. This Order frames the pursuit of responsible mining within the Minerals Action Plan (MAP). The MAP Policy Agenda states, among others, that:

• Government recognizes the critical role of investments in the minerals industry for national development and poverty alleviation and shall provide support mechanisms for a sustained mineral exploration program. This includes the streamlining of procedures of concerned government agencies and instrumentalities relating to the grant of mining tenements, responsive research and development priorities and capability building for industry manpower.
• Clear, stable and predictable investment and regulatory policies shall be instituted to facilitate investments in mining, leading to a prosperous minerals industry.
• Efficient technologies shall be adopted to ensure the judicious extraction and optimum utilization of non-renewable mineral resources to enhance sustainability.
• Protection of the environment shall be a paramount consideration in every stage of mining operation; mitigation and progressive rehabilitation measures shall be integral components of mining operations. Decommissioning and/or final mine rehabilitation shall be supported by the most appropriate environmental surety.
• The ecological environmental sustainability of areas affected by mining operation (including biodiversity resources and small island ecosystem) shall be safeguarded in order to protect public welfare, safety and environmental quality. The rights of affected communities—including the rights of indigenous cultural communities, especially the free and prior informed consent requirement—shall be protected.

Following this roadmap, the government, in partnership with the mining industry and technology partners, has set out to pursue the development of 24 large-scale mining projects that will bring in:

• An estimated US $4.0-6.0 billion in investments
• US $5.0-7.0 billion in foreign exchange
• PhP 5.0-7.0 billion in excise taxes alone, and
• Mmore than 200,000 forms of direct and indirect employment.

We envision Canada, China, Australia, and the US as our major partners in a revived Philippine mining industry.

To operationalize the key points in the policy agenda, my Department has appointed “high-level action officers”, whose task is to shepherd the priority mining projects. This illustrates that we in government have evolved from being mere “regulators” into more active partners of responsible mining projects.

Last year, we made a major policy reform to allow only the Exploration Permit or the FTAA as the initial mode of entry in the conduct of mineral exploration. We simplified the processing procedures and reduced the documentary requirements for mining approvals. The processing of exploration permits has now been reduced to five months. If you have submitted all the necessary requirements and my Department has not acted on it after five months, you can execute an Affidavit that you have submitted all requirements, and your application will be deemed approved in five days.

One of the major thrusts in my Department is a dual-tiered policy of expediting issuance of mining contracts and permits and the strict monitoring and penalizing of erring mining contractors and permittees. We have been conducting an inventory of mining tenements and have identified non-performing mining contracts and agreements. Last year, we cancelled 83 non-performing mining tenements following due process and we are opening them up for new applications.

On a parallel track, the Philippine Stock Exchange (PSE) has relaxed its rules to allow more exploration and mining companies to be listed in order to raise capital through the stock market without the 3-year profitability requirement. In relation to this, we have also finalized the first ever Philippine Mineral Reserves and Resources Classification System compatible with global standards.

To sustain the industry’s momentum along these diverse fronts, the President has created the Minerals Development Council (MDC). Under my chairmanship, the Council is tasked with coordinating all the efforts of government and addressing all your concerns through investment promotions, expeditious processing, public information and stakeholder dialogues.

All our efforts to promote the development of the mining industry paid off when the Philippines was awarded the first ever Mining Journal Country Award for Outstanding Achievement for “making the most improvement in terms of attractiveness to mineral investors and pro-active stance for sustainable mining” among 120 mining investment destinations worldwide.

Now on the third question of do we have the reserves and what major projects are on-going or in the pipeline? The most concrete fruits of these efforts have been the investments that have started to come in as part of the US$8 billion, which our 24 major mining projects will require in investments for the next five to six years. The most notable of these are in copper, gold and nickel projects, which I shall describe briefly.

Copper metal production in the Philippines can increase to over 500 thousand tons annually by 2013 with the development of the major projects now in the pipeline. Of major significance are three world-class deposits:

The Tampakan Project of Sagitarrius Mines and Indophil is over a billion ton copper-gold deposit located in Mindanao and is considered one of the biggest undeveloped projects in the world. It is now winding up its pre-feasibility stage. Xtrata, which has an option to purchase 62% of the ownership of the project within the year, is conducting its due diligence on the project.

Anglo Philippines is in joint venture with Philex Mines in the Boyongan copper-gold porphyry project, also in Mindanao Island. It has over 200 million tons resource and is embarking in another 17,000 meters of in-fill drilling. An adjoining property has potentially a similar tonnage and grade as the Boyongan and can be integrated into a large single operation.

Lepanto is searching for a joint venture partner to develop its Far Southeast Project, a deep seated copper-gold porphyry deposit in Luzon. It is a 600 million ton ore body with a high grade core of about 150 million tons.

Gold has historically been a leading product of the Philippine mining industry. The two best gold projects are those under the National Resources Mining Development Corporation, a State-owned Corporation. The Diwalwal Gold Project in Mindanao is now being explored and high grade tonnage is being blocked out below the artesian mining areas. Nearby North Davao Mining Company is scheduled to be privatized within the next first half of the year. The copper mines have substantial gold by-products. The new gold projects now under exploration, will bring the total gold production to over 70 tons of gold annually.

The country will be a major nickel producer anew, once the nickel projects will be operational by 2011. It is projecting a total of 206 thousand tons of nickel metal, coming from the large lateritic deposits, which now can be economically mined and treated by the HPAL process. Sumitomo of Japan has successfully installed a 10,000 ton plant in western Philippines and will double its capacity by 2007. Jinchuan Metals, the largest nickel producer in China has signed a letter of intent and is conducting due diligence to evaluate an investment of US$1 billion to re-open the Nonoc Mines and produce 40,000 tons per nickel metal in mixed sulfides.

All these projects are but the tip of the proverbial iceberg. For, out of the 30 million hectares of the Philippines, 9 million hectares—or 30% of the entire country—are identified to have high potential for mineral deposits. Yet only about 420,000 hectares or a mere 1.4% of the 30 million hectares are covered with existing mining rights.

Let this therefore be your cue to accept our invitation for partnership. Not only will you enjoy a highly supportive policy and legal environment conducive to your requirements. You also stand to reap the rewards of investments rendered more promising by the strategic location geographical character and human resources of our country. As you know, the Philippines is a gateway to the lucrative markets of South- and North-east Asia and China. And, as an archipelago, the Philippines gives you the natural edge of proximity to a port as transshipment point virtually anywhere in the islands. Finally, you have access to a rich pool of English-speaking professionals and workers who are in demand all over the world.

But like I always say, don’t take my word for it. See for yourselves what we can do together by participating in the Mining Philippines Conference in October 2006. Our points of contact will be our ambassadors in your respective countries.

In closing, we invite you not just to ride a major flagship of Philippine economic growth but to help steer it towards our common destination: the provision of a better quality of life for our people.

Thank you and good day.